The startup world thrives on bold visions, rapid scaling, and massive funding. But ambition comes with risk. In recent years, several high-profile startups—some valued in the billions—have collapsed under financial mismanagement, inflated valuations, and operational chaos. These failures not only wiped out investor wealth but also triggered a deeper conversation about sustainability and accountability in the startup ecosystem. Below are the ten most dramatic startup bankruptcies of recent times.
1. Builder.ai – The Unicorn That Faked Automation
London-based Builder.ai positioned itself as a revolutionary platform that could help businesses build software using artificial intelligence. Backed by Microsoft and boasting a valuation above $1.5 billion, the startup promised AI-generated app development. In reality, the company relied on over 700 human developers in India, passing them off as AI.
Once the truth surfaced, investor confidence collapsed. Viola Credit, a major lender, froze $37 million in funds. Amazon and Microsoft, also investors, found themselves entangled in a scandal involving over $100 million in liabilities. Builder.ai filed for bankruptcy in the U.S., marking one of the most sensational tech downfalls of the decade.
2. Northvolt – Green Tech’s Billion-Dollar Misfire
Northvolt raised over $14 billion to build high-capacity battery factories in Europe. Investors, including Goldman Sachs and Volkswagen, embraced the company’s ambition to lead the clean energy transition. However, Northvolt struggled with soaring operating costs, construction delays, and heavy debt obligations.
By early 2025, the company reported over $5 billion in outstanding debt with only $30 million in cash on hand. With creditors circling and production pipelines unfinished, Northvolt filed for Chapter 11 protection in a desperate move to restructure.
3. Plenty Unlimited – When Indoor Farming Turned Toxic
Plenty Unlimited aimed to revolutionize agriculture through indoor vertical farms. The company secured funding from Jeff Bezos and SoftBank and received widespread praise for combining foodtech with sustainability. But the company failed to scale efficiently. Energy bills skyrocketed. Capital dried up.
Plenty’s operations proved too expensive to maintain. In 2024, the company filed for bankruptcy. It secured an $8.7 million bridge loan to restructure and began seeking $30 million in fresh equity to survive. Despite its initial promise, Plenty’s collapse highlighted the fragile economics behind futuristic farming.
4. Solid Financial Technologies – A Fintech Flameout
Solid provided a “banking-as-a-service” platform that targeted fintech startups. Although the company raised significant capital, it ran into regulatory headaches and legal disputes. Customers accused the company of data mismanagement and withheld funds. Several of these disputes escalated to lawsuits.
Without new funding, and with liabilities increasing, Solid filed for Chapter 11 bankruptcy. The company held around $7 million in cash but owed over $750,000 in unpaid vendor bills. The case underscored the importance of compliance in highly regulated industries like finance.
5. Arrival – Electric Dreams Derailed
Arrival, a U.K.-based electric vehicle (EV) startup, debuted via a special purpose acquisition company (SPAC) with a jaw-dropping $13 billion valuation. Investors and media outlets hailed Arrival as the next Tesla. The company promised modular EV vans and buses, but it failed to deliver at scale.
By 2024, the company had burned through most of its cash. Its valuation plummeted by over 95%. In early 2025, Arrival’s U.K. operations entered administration, and it began liquidating assets to repay creditors. The SPAC bubble had claimed another high-profile victim.
6. Lilium – Flying Taxis Never Took Off
Lilium, a German flying taxi startup, promised an air mobility revolution. The startup raised hundreds of millions and also went public through a SPAC. However, its prototype aircraft faced engineering challenges, regulatory delays, and budget overruns.
In October 2024, Lilium declared insolvency. A consortium purchased its remaining assets, but the core business model collapsed. Lilium’s demise reinforced that deep tech, while visionary, demands far more than pitch decks and PR.
7. Cazoo – The Used-Car Boom That Went Bust
Cazoo operated as a digital car-selling platform in the U.K. and expanded aggressively across Europe. At its peak, the company reached a valuation of $8 billion. However, operational costs skyrocketed. The company borrowed heavily to expand inventory and logistics without establishing profitability.
By 2024, Cazoo carried $630 million in debt and little runway. It filed for administration in a restructuring move. Analysts blamed its “growth-at-all-costs” approach, which worked during the pandemic but collapsed as consumer demand normalized.
8. Infarm – Too Vertical, Too Fast
Infarm built modular indoor farming units and claimed to operate over 1,400 farms across 11 countries. The company attracted nearly $500 million in funding and expanded rapidly. But operational inefficiencies, energy costs, and low output volumes made the model unsustainable.
Infarm’s U.K. arm filed for bankruptcy. The company laid off hundreds and closed multiple international branches. Investors, once enamored with ag-tech’s green promise, now viewed it as an expensive experiment with little return.
9. EasyMile and Cubyn – Logistics and Autonomy Collapse
EasyMile, a French startup focused on autonomous shuttle systems, failed to convert pilot projects into commercial success. Without revenue traction and with safety concerns mounting, EasyMile filed for insolvency in mid-2024.
Cubyn, another French startup, built logistics infrastructure for e-commerce companies. Despite a $175 million valuation, the startup couldn’t achieve scale or profitability. It folded in 2024, citing unsustainable costs and investor fatigue.
10. Allplants and Others – Niche Startups Run Out of Road
Allplants, a U.K.-based vegan meal-kit startup, raised $81 million and enjoyed early traction. However, competition from global players and high churn rates led to mounting losses. In late 2024, it filed for administration.
Other notable names include MaaS Global (mobility-as-a-service), Masteos (proptech), Mycorena (alternative proteins), and Cake (electric motorcycles). Each operated in niche markets but failed to withstand macroeconomic headwinds and shrinking venture appetite.
What Drove These Failures?
Funding Overload
Most of these startups raised capital aggressively during the 2020–2021 boom. Investor enthusiasm overshadowed fundamental business viability. When interest rates rose and markets tightened in 2023–2024, these companies faced a cash crunch.
Operational Inefficiencies
Indoor farming, autonomous shuttles, and electric mobility come with high fixed costs. Without optimized operations, revenue simply cannot keep pace with expenses.
SPAC-Driven Delusions
Companies like Lilium and Arrival tapped public markets through SPACs, securing billion-dollar valuations before proving product viability. These early exits proved disastrous when market conditions shifted.
Legal and Reputational Risks
Builder.ai and Solid Financial Technologies suffered due to credibility issues and lawsuits. Founders must ensure ethical practices, especially when dealing with users’ money or data.
Lessons for Founders and Investors
- Avoid hype-led valuations: Growth means nothing without sound business models.
- Maintain operational discipline: Cash flow matters more than press coverage.
- Be transparent: Misleading stakeholders, as seen with Builder.ai, can ruin companies.
- Expect due diligence: Investors now demand proof, not promises.
- Diversify capital: Don’t rely solely on VCs. Look at revenue, partnerships, and grants.
Final Thought
The startup world continues to be a thrilling space for innovation, but the failures of these high-profile companies serve as warnings. Scale, vision, and funding alone do not guarantee success. Execution, transparency, and financial prudence remain the pillars of long-term startup survival.
If 2020–2021 was the age of exuberance, 2024–2025 is the era of reckoning. And that might just make the next wave of startups stronger, leaner, and wiser.